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What Can Investors Expect from Qualcomm’s 1Q16 Earnings?

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Dec. 4 2020, Updated 10:50 a.m. ET

Qualcomm’s fiscal 1Q16 earnings coming soon

Qualcomm (QCOM), a world leader in 3G and 4G (third and fourth generation) wireless technologies, is set to release its fiscal 1Q16 earnings on January 27, 2016. The antitrust issue in China (FXI), losing a key customer like Samsung Electronics (SSNLF), and the strong US dollar took its toll on the company’s earnings in fiscal 4Q15, and these headwinds are likely to continue in fiscal 1Q16. However, a few announcements over the quarter bring some hope for future growth.

In this series, we’ll see what the company’s fiscal 1Q16 earnings could bring for investors in the wake of a volatile fiscal 2015.

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Qualcomm’s EPS

According to the Qualcomm’s fiscal 1Q16 guidance, non-GAAP (generally accepted accounting principles) EPS (earnings per share) is expected to be in the range of $0.80–$0.90, slightly lower than the fiscal 4Q15 EPS of $0.91.

Analysts expect the company to report EPS of $0.90 in fiscal 1Q16. If we look at the past four quarters estimated and actual EPS, the company has beaten the estimates by an average of 9%. Considering this trend is maintained in fiscal 1Q16 as well, the company is expected to report an EPS of $0.98 and above.

Qualcomm’s revenues

The fiscal first quarter of a year is the peak season for Qualcomm. However, the company expects to post a modest increase in fiscal 1Q16, with revenues expected to fall between $5.2 billion and $6 billion, compared to $5.5 billion reported in fiscal 4Q15. This is because the company expects the headwinds that affected its fourth quarter revenues to continue in fiscal 1Q16 as well.

Recently, TSMC (TSM) reported lower revenues due to softness in high-end smartphone sales. Even Apple (AAPL) scaled back its production of iPhone 6s and 6s Plus. These reports suggest that Qualcomm may post lower revenues but higher MSM (mobile station modem) units as the trend shifts away from high-range to low- and mid-range smartphones, which generate lower margins.

In the next part of the series, we’ll look at the key markets that could drive the company’s growth in fiscal 1Q16.

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